Muthoot Finance STUNS Market! Record Profits & 10% Stock Surge – Are You Missing Out?

Author

Akshat Lakshkar | Whalesbook News Team

Detailed Coverage:

Muthoot Finance experienced a significant surge in its stock price, rising by approximately 10% on Friday. This rally followed the announcement of the company's best-ever quarterly and half-yearly financial performance. The driving forces behind this exceptional result were record growth in its gold loan portfolio, an expansion in net interest margins (NIM), and robust recoveries from non-performing assets.

The company's consolidated Assets Under Management (AUM) reached an all-time high of Rs 1,47,673 crore as of September 30, 2025, marking an impressive 42% year-on-year (YoY) increase. Consolidated Profit After Tax (PAT) for the first half (H1) of FY26 soared by 74% YoY to Rs 4,386 crore, also a record for any first half.

Standalone figures were equally robust, with standalone AUM climbing 47% YoY to Rs 1,32,305 crore and standalone PAT jumping 88% YoY to Rs 4,391 crore. The core gold loan business was the primary growth engine, with gold loan AUM reaching a record Rs 1,24,918 crore, up 45% YoY.

Brokerage firm Motilal Oswal noted that Muthoot Finance delivered a 'shining stronger' performance, attributing it to the ~45% YoY jump in gold loan growth, a ~60 basis points (bps) quarter-on-quarter (QoQ) NIM expansion, and improved recoveries. Gross Stage 3 (GS3) assets improved by 35 bps QoQ to 2.25%, and spreads widened to approximately 11.8%. The brokerage highlighted that Q2 PAT grew 87% YoY, partly boosted by a one-time interest income write-back of Rs 3–3.5 billion from liquidated NPA accounts.

Despite the strong financials, Motilal Oswal maintained a 'Neutral' rating with a target price of Rs 3,800, citing elevated valuations at 3.1 times FY27 Price-to-Book Value (P/BV) and 14 times Price-to-Earnings (P/E). The company continues to benefit from high gold prices and strong demand for gold loans amid tightening unsecured lending.

Management remains optimistic. Chairman George Jacob Muthoot attributed the record performance to the core gold loan business and customer trust. Managing Director George Alexander Muthoot raised the FY26 gold loan growth guidance to 30–35%, influenced by favourable regulatory changes, rising gold prices, and recovering microfinance demand.

Analysts suggest that while Muthoot Finance has strong momentum and a deep franchise in gold loans with improving credit trends, its current elevated valuations might limit immediate stock upside.

Impact: This news has a significant positive impact on Muthoot Finance's stock and sentiment within the Non-Banking Financial Company (NBFC) sector, particularly those focused on gold loans. It signals strong operational performance and profitability, which can boost investor confidence. However, concerns about valuation might moderate future gains. Impact Rating: 8/10

Definitions: Assets Under Management (AUM): The total market value of investments that a financial institution manages on behalf of its clients. For Muthoot Finance, it represents the total value of loans outstanding. Profit After Tax (PAT): The profit a company has earned after deducting all expenses, including taxes. It is often referred to as the 'bottom line'. Year-on-Year (YoY): A comparison of a company's financial performance over a period with the same period in the previous year (e.g., Q2 2024 vs. Q2 2023). Quarter-on-Quarter (QoQ): A comparison of a company's financial performance over a period with the previous quarter (e.g., Q2 2024 vs. Q1 2024). Net Interest Margin (NIM): The difference between the interest income generated by a bank or other financial institution and the interest it has paid out to its lenders (for example, its depositors), expressed as a percentage of the amount of interest-earning assets. It indicates profitability from lending. Gross Stage 3 (GS3): Refers to the asset classification under Indian accounting standards for loans that are considered non-performing. GS3 assets are loans where the principal or interest is overdue for more than 90 days. Non-Performing Asset (NPA): A loan or advance for which the principal or interest payment remained overdue for a period of 90 days or more. Price-to-Book Value (P/BV): A valuation ratio that compares a company's market capitalization to its book value. It indicates how much investors are willing to pay for each dollar of a company's net assets. Price-to-Earnings (P/E): A valuation ratio that compares a company's stock price to its earnings per share. It indicates how much investors are willing to pay for each dollar of earnings.